The Next Big Stock Splits After Apple

April 30, 2014 by Jon C. Ogg

Back in the tech bubble ’90s, stock splits were a common occurrence. In fact, in the later part of that decade, around 20% of the S&P 500 companies were doing just that. When the financial crisis of 2008 cut stock prices to decade lows, not a single company wanted to cut its stock price further by splitting the stock. In a new research report, the Trading Strategy analysts at Credit Suisse wonder if the Apple Inc. (NASDAQ: AAPL) huge seven-for-one split may start a trend.

They point out that since the market low of March 2009, the index has almost tripled, and the average price of a single stock in the S&P 500 is right at $80. They cite a reluctance from companies to split their stocks, and many have sky-high prices the average investors cannot touch. Despite that reluctance, some top names may be ready to take the plunge and follow Apple’s lead.

Here are some of the companies that Credit Suisse thinks may be ripe for a split. We have listed the names by price.

Priceline Group Inc. (NASDAQ: PCLN) is an obvious first choice. The online travel giant has traded above the $1,000 level for some time, and the free-float of the stock, according to Yahoo! finance, is just under 52 million shares. The Thomson/First Call price target for the stock is $1441.40. Shares traded at $1,149.12 early Wednesday.

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AutoZone Inc. (NYSE: AZO) led the charge for the auto parts company rally the past three years and could also be a strong candidate for a split. This is a company that has a very small 32.86 million share float. Something like a three-for-one, or even a four-for-one, would not be out of the question. The consensus price target for this market leader is $567.53. AutoZone traded just over $530 early Wednesday.

Chipotle Mexican Grill Inc. (NYSE: CMG) has made a fool out of short sellers for years, and it could also be in a good spot for a stock split. The company also has a very small free float of just 30.51 million shares, and just over 31 million outstanding. The burrito giant remains a momentum favorite. The consensus price target is a whopping $609.55. The stock traded near $486.40.

Intuitive Surgical Inc. (NASDAQ: ISRG) has seen some incredible volatility in its stock over the past year. Although its DaVinci robotic surgical machine has been approved and used for more procedures, the company and hospitals have faced some scrutiny over physician use and practices. Like the others, with a small 37.6 million share float, the company could easily do a stock split. The consensus price target is $464.50. Shares traded Wednesday near $360.

Netflix Inc. (NASDAQ: NFLX) is another name that has shown big volatility. The company has burned the short sellers and continues to expand its subscriber base and original programming. The free float for the stock stands at 58.73 million shares, a very workable level for more shares. The consensus price target is $410.03. Netflix trades just above $315.

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Amazon.com Inc. (NASDAQ: AMZN) is another big tech name that would be a solid candidate. The online retailer has been hammered of late, but it remains the go-to site for people looking to shop on the Web. The Amazon float is much larger at 375 million shares, but that would not preclude it from going ahead with a split. The consensus price target for the stock is a big $419.33. Amazon traded near $299 Wednesday morning.

Biogen Idec Inc. (NASDAQ: BIIB) is a top biotech name that was eviscerated in the momentum sell-off. The company has one of the deepest and strongest pipelines in the business. With a float of 236.49 million shares, a stock split is not out of the question for this blue chip biotech. The consensus price target is $345.64. Biogen is trading near the $285 level.

Credits Suisse also listed Regeneron Pharmaceuticals, Alliance Data Systems, IntercontinentalExchange Group and Visa as other high-profile names that would be solid candidates for a split.

It is important to remember that a split does not change the overall value of a stock holding. A two-for-one split is simply two half dollars for a dollar. It can though: boost the share price, tighten spreads and increase liquidity, increase daily trading volume and enhance price transparency. All of those are extremely positive for a stock and the investors that own it.

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